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Contradictory entrails; what does the financial health at present mean for the art market?

Sales are buoyant in some areas but real estate is weakening and nerves are showing

With our financial health the overwhelming topic in New York, the mood is jittery, to say the least. Merrill Lynch, the stalwart worldwide brokerage house, lays off a dramatic 3,400 and rumours regarding the future of brokerage giant, Lehman Brothers, continue to swirl about. What does it all mean for the art market?

There are alarming indicators, such as the faltering price of real estate. Upper East Side real estate brokers say coop prices are being slashed ten percent. “We’ve had broad price reductions, particularly in the $1 million-plus range,” revealed Barbara Corcoran, whose firm routinely sells almost $1 billion worth of Manhattan residential property a year. “There’s a definite mood change, but still there are three buyers for every apartment that’s listed at $1.5 million and over.”

A quirky indication is that last month she had a number of calls from would-be sellers asking her to list their mega-million apartments: “But they caution me not to tell anyone of the impending sale. There’s no rationale to that at all—it’s just nerves,” continues Ms Corcoran.

One Upper East Side, top line, paintings dealer who preferred to remain anonymous said, “In the past ten days, I’ve had two paintings returned. Doesn’t that say it all?”

But despite the troubled climate, Mr Feigen does have a client keenly interested in tackling a Sotheby’s painting or two. “Some clients just aren’t affected by the daily vicissitudes of the stock market,” he observes. “If the sale were tonight, prices would be steep.” At the International Fine Art Fair in the Armory, sales were almost feverish (see. p.75)

Khalil Rizk has had clients calling frantically and voicing apprehension. “Undoubtedly, the times will be a little rocky over the next six months,” he says. But he reports selling almost half of the sixty-piece seventeenth- and eighteenth-century Chinese export porcelain currently on show at his Park Avenue gallery, at prices from $3000 to $320,000. “That’s what I’d expect in normal times,” says Mr Rizk. Sales for his top line French and Russian furniture is somewhat slower. Prices range from $50,000 to $2.5 million for a pair of Caffieri busts. But museums have shown serious interest, as well as collectors in England, Portugal and Switzerland, he reports, “and by next week, six of those objects will be sold.”

At Christie’s mid-October English Furniture sale, a pair of eighteenth-century armchairs from Chatsworth that had belonged to Henry Clay Frick, went for a “mere” $440,000 against a $600,000 estimate, but the sale was still 75% sold by lot and 84% by dollar.

For dealer James Goodman, former Art Dealers Association of America president, mid-October was highly successful. He reports sales of a Botero painting for six figures, a De Kooning drawing and a small Marini sculpture. In addition, he has reserves on four Henry Moore sculptures. “The stock market goes up one day and down the next. Call it corrections. Right now, I’m not affected.”

For an academic point of view, The Art Newspaper turned to global economist, Saskia Sassen, who is known for her detailed studies of world-class cities. From her office at the University of Chicago she said: “Despite the trembling stock market, there’s still a large elite out there with vast amounts of capital—and only a limited number of fine art objects”. She firmly believes that niche markets such as art can still thrive. In these times of financial tremors, Dr Sassen, who is the author of the recently published Globalization and its Discontent (New Press, $35), says the right works of art can be a far better investment than stocks and bonds. However, she believes that only the top items will sell and the middle market will be severely buffeted.

We must beware of jumping to despairing conclusions from auction results, says one longtime dealer who last month returned from Europe where the US stock market was on everyone’s mind: “If the Modiglianis of Jeanne Hebuterne in the Reader’s Digest sale at Sotheby’s only bring $8 million a piece instead of $12, it should not be interpreted as a failure—just a market correction.”

Certainly, our sang froid is to be tested in the next few weeks. Aside from the Reader’s Digest paintings, the Morton G. Neumann collection is also under the hammer. Their twenty-seven paintings ought to make $16-20 million, with Picasso’s cubist “Nude” of 1909, estimated at $10-15 million. The same day, Sotheby’s will auction works from the collection of Mildred and Herbert Lee, estimated to fetch $13.5 million. Top lot is Jasper Johns’ “White numbers”. Can this out-do the Jasper Johns at the Ganz sale only a year ago? That painting was expected to fetch $5-6 million, yet hit a cool $7.9 million.

Originally appeared in The Art Newspaper as 'Contradictory entrails'